Jan 16, 2014

The War on Drugs Affects Mainly the Poor (Mexico)

There are few reliable estimates of the effects of violence on economic outcomes. This study exploits the manifold increase in homicides in 2008-2011 in Mexico resulting from its war on organized drug traffickers to estimate the effect of drug-related homicides on housing prices. Using an unusually rich dataset that provides national coverage on housing prices and homicidesand exploits within-municipality variation, the study finds that the burden of violence affects only the poor. An increase in homicides equivalent to one standard deviation leads to a 3 percent decrease in low-income housing prices. Moreover, the effect on housing prices of long-term increases in crime is 40 percent larger.
That is from this paper by Nicolas AjzenmanSebastian Galiani, & Enrique Seira

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